Türkiye’s annual inflation rate accelerated in May to 75.45 percent, according to official data. This rapid rise in consumer prices has prompted the central bank to expect that inflation has finally reached its peak and will begin to slow down next month.
Türkiye has been grappling with a severe cost-of-living crisis, which led President Recep Tayyip Erdoğan to abandon his previous opposition to interest-rate hikes as a tool to combat inflation. The central bank started raising its key rate in June 2023, gradually increasing it from 8.5 percent to 50 percent.
Read more: Türkiye’s robust domestic demand drives 5.7 percent Q1 2024 growth
Last month, Fatih Karahan, Central Bank governor, revised the year-end inflation forecast upwards, from 36 percent to 38 percent. However, Karahan also stated that inflation would start to decelerate in June after reaching its maximum in May.
The Turkish Statistical Institute (TurkStat) reported that annual inflation reached 75.45 percent in May, up from 69.8 percent in April. Consumer prices rose by 3.7 percent on a monthly basis between April and May, in line with the central bank’s projections.
In response to the staggering rise in consumer prices and the collapse of the Turkish lira, Finance Minister Mehmet Şimşek announced a three-year austerity plan last month, aimed at reducing public spending to help curb inflation.
Türkiye’s economy grew 5.7 percent in the first quarter (Q1) of 2024, in line with expectations, according to official data released last week. The strong growth was driven by robust domestic demand.
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